If you are doing exercises, especially if you want them to be able to "fix" what they might get wrong, I would suggest using the Journal plugin. The advantage to the teacher is that it will show everyone's entry on one scrollable page.
Also, for the preview part, make sure your editor, (I use Atto) , has the equation editor installed. It's been so long that I can't remember for sure, but I think it is in Moodle automatically. At least it shows here in the forum while editing. While using it in the editor, as they add to their equation, it shows a preview of what they are trying to enter.